Bibelot creditors appeal Bankruptcy Court ruling

Petition seeks to reverse dismissal on technicality

February 26, 2002|By Lorraine Mirabella and Gus G. Sentementes | Lorraine Mirabella and Gus G. Sentementes,SUN STAFF

Bibelot bookstores' creditors have asked a federal court to reverse the U.S. Bankruptcy Court's dismissal of an involuntary bankruptcy filed against Bibelot owners Brian D. and Elizabeth G. Weese.

Bank of America, along with three other creditors, said in papers filed Friday in U.S. District Court that the bankruptcy court wrongly dismissed the Chapter 7 case, which they said should proceed against Elizabeth Weese.

The bank, along with Allfirst Bank, Community Banks NA and MART Ltd. Partnership, filed the involuntary Chapter 7 petition against the Weeses on Aug. 23 as part of efforts to collect more than $25 million in debts incurred when the couple was operating the Bibelot chain.

Before Bank of America filed the Chapter 7 petition, and while it was trying to collect on debt of more than $15.5 million, the bank says the Weeses transferred tens of millions of dollars in assets offshore, intending to defraud creditors.

After realizing that the bankruptcy code doesn't allow involuntary petitions filed jointly against a husband and wife, the bank and the other creditors amended their filing Sept. 28, deleting Brian Weese as a creditor.

Bankruptcy Judge James F. Schneider's decision to dismiss the case, after a Jan. 15 hearing, hinged on that point. The court said it lacked jurisdiction because the case had been improperly filed as a joint petition.

In the papers filed Friday appealing the Chapter 7 dismissal, the creditors contended that the joint filing should be treated as a technicality and that the Chapter 7 filing should proceed against Elizabeth Weese individually, retaining its original Aug. 23 date, rather than the Sept. 28 date of the amended filing.

That date is important, the creditors argued, because trustees in Chapter 7 cases can "look back" for one year prior to the filing to uncover assets that are not part of pending lawsuits but that may have been fraudulently moved out of reach of creditors.

Two separate Chapter 11 bankruptcy cases are pending, one against Brian Weese and another against Elizabeth Weese, in U.S. Bankruptcy Court.

Those cases originally had been filed as Chapter 7 bankruptcies by creditors on Sept. 28, and the Weeses ultimately converted them to Chapter 11 bankruptcies.

Bank of America also is seeking to collect its debt through two other pending lawsuits, including one in Baltimore County Circuit Court which alleges that the Weeses defrauded creditors by moving $25 million to a trust in the Cook Islands in the South Pacific.

That case is scheduled for trial May 13, but attorneys may be moving to extend the start date.

The bank also has filed a lawsuit in the Cook Islands, which is likely to go to trial this fall.

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